Prospects for the Visa/MasterCard antitrust settlement received another jolt last week when the Retail Industry Leaders Association weighed in against the terms, joining other influential opponents of the landmark deal.
"While Visa and MasterCard's decision to pursue a settlement affirms the legitimacy of retailers' claims, the flawed proposal upholds the networks' anticompetitive practices and fails to provide retailers and their consumers with meaningful relief from tens of billions of dollars in hidden fees," said Sandy Kennedy, president of the association, in a press release. The group represents such major retailers as Best Buy, Sears, American Eagle, Walgreens, the GAP, Bed Bath & Beyond, Staples, Nike and Whole Foods.
"We urge class plaintiffs to reject the proposal and send a clear message that a settlement that fails to engender competition and fix the broken electronic payments market is unacceptable," said Kennedy.
Opposition to the antitrust deal continues to mount with the National Association of Convenience Stores, National Cooperative Grocers Association, National Grocers Association, National Community Pharmacists Association, the Texas Food & Fuel Association, the Society of Independent Gasoline Marketers of America, as well as retail giants Walmart and Target, all saying they will oppose the landmark settlement.
The various groups' opposition is critical because the settlement must be approved by a federal judge after weighing concerns by the affected parties.
The retail group cited the release from future legal claims against Visa and MasterCard among its concerns. "Retailers are concerned that in addition to limiting their future legal options, the proposed settlement preserves the Visa/MasterCard duopoly and constrains emerging innovations that could bring meaningful competition to the marketplace," said Kennedy.
The deal would settle civil antitrust charges alleging Visa and MasterCard violated provisions of the Sherman Antitrust Act by fixing interchange fees charged to merchants on credit card transactions.
Under the terms of the settlement, Visa, which controls roughly two-thirds of the market, would pay $4.4 billion and MasterCard would pay $790 million. A dozen banks that dominate the two card networks would pay another $1.2 billion into the pot. The $7.2 billion would be spread among 7 million retailers.
Visa and MasterCard would pay merchants what will amount to a $1.2 billion rebate of interchange fees over the next eight months. The two cards giants would also no longer try to stop merchants from encouraging other forms of payment, such as cash or checks.